Are Health Savings Account (HSA) Compatible Health Insurance Plans Expensive Compared to a Night in the Hospital or Compared to One’s Rent?

Health Savings Account (HSA) compatible health insurance plans have very high deductibles, (minimum $1,000 for an individual and minimum $2,000 deductible for a family.) (These High Deductible Health Plans are also called HDHP). Because a person with one of these plans is assuming so much risk, naturally people expect these plans to be low cost. They are low cost, but they are not free – or anywhere near free. One’s perception that something is expensive or inexpensive is relative: a medical insurance plan is expensive or cheap depending on what you compare it to.

So, the question becomes: HSA compatible health insurance plan is expensive compared to what? Let’s look at some comparative costs using the example of a family of four with a husband and wife in their 30’s with two children under age 18, all of whom live in Santa Monica, California.

An individual Blue Shield of California HSA compatible health insurance plan (Shield Spectrum Savings) costs $300 per month for this family. This plan has a $4,800 deductible to which all members of the family contribute. Further, the “Out of Pocket Maximum” (i.e., after which generally the plan pays 100 percent of medical expenses) is $5,800 including the deductible (or the deductible plus $1,000.) With no context in which to evaluate these costs we can not answer the question of whether the plan is expensive or inexpensive. So let’s compare these costs to a few other items.

A single night in a hospital costs approximately $5,000. This family can get health insurance coverage in California for nearly one and a half years for the cost of one night in the hospital. The HSA compatible health insurance plan seems inexpensive when you think that four people get more than a yearâ€™s worth of medical insurance coverage for the price of one night in the hospital.

The monthly rent or home mortgage for a family of four could vary from $500 – $5,000 per month or more. For someone paying $500 per month for rent, $300 per month may seem very expensive. Conversely, someone paying a $5,000 per month mortgage may find $300 for family coverage very inexpensive. So, relative to one’s income the cost for the HDHP could be cheap or expensive.

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